LOANS

12 Months Ended

Dec. 31, 2023

Receivables [Abstract]

LOANS

NOTE 6 LOANS

Loans receivable outstanding as of December 31, 2023 and 2022, are summarized as follows:

 Summary of loans receivable outstanding

		December 31,
(Dollars are in thousands)		2023		2022
Real estate secured:
Commercial	$	240,187	$	197,069
Construction and land development		28,830		42,470
Residential 1-4 family		238,233		227,232
Multifamily		34,571		29,710
Farmland		16,401		17,744
Total real estate loans		558,222		514,225
Commercial		53,230		46,697
Agriculture		3,508		3,756
Consumer installment loans		22,639		19,309
All other loans		512		626
Total loans	$	638,111	$	584,613

Also included in total loans above are deferred loan fees of $1.8 million and $1.6 million, as of December 31, 2023 and 2022, respectively. Total deferred loan costs were $2.0 million and $1.9 million, as of December 31, 2023 and 2022, respectively. Income from net deferred fees and costs is recognized over the lives of the respective loans as a yield adjustment. If loans repay prior to scheduled maturities any unamortized fee or cost is recognized at that time.

Loans receivable on nonaccrual status as of December 31, 2023 and 2022 are summarized as follows:

 Summary of loans receivable on nonaccrual status

				CECL						Incurred Loss
				December 31, 2023						December 31, 2022
(Dollars in thousands)				With No Allowance		With an Allowance		Total
Real estate secured:
	Commercial		$	544	$	268	$	812	$	-
	Construction and land development			-		-		-		471
	Residential 1-4 family			2,495		-		2,495		2,597
	Multifamily			199		-		199		268
	Farmland			-		-		-		41
		Total real estate loans		3,238		268		3,506		3,377
Commercial				-		-		-		-
Consumer installment loans and other loans				28		-		28		36
Total loans receivable on nonaccrual status			$	3,266	$	268	$	3,534	$	3,413

Total interest income not recognized on nonaccrual loans for 2023 and 2022 was approximately $61,000 and $10,000, respectively.

Prior to the adoption of ASU 2016-13, loans were considered impaired when, based on current information and events, it was probable the Company would be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans included loans on nonaccrual status and accruing troubled debt restructurings. When determining if the Company would be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considered the borrower’s capacity to pay, which included such factors as the borrower’s current financial statements, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as guarantor support and collateral value. The Company individually assessed for impairment all nonaccrual loans greater than $250,000 and all troubled debt restructurings, whether or not currently classified as such. The tables below include all loans deemed impaired, whether or not individually assessed for impairment. If a loan was deemed impaired, a specific valuation allowance was allocated, if necessary, so that the loan was reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment was expected solely from the collateral. Interest payments on impaired loans were typically applied to principal unless collectability of the principal amount was reasonably assured, in which case interest was recognized on a cash basis.

Upon adoption of ASU 2016-13 the Company began evaluating loans that do not share risk characteristics on an individual basis utilizing the collateral or discounted cash flow methods as described in Note 2 Summary of Significant Accounting Policies. The following table presents the amortized cost basis of collateral dependent loans, which are individually evaluated to determine expected credit losses, and the related allowance for credit losses allocated to those loans as December 31, 2023:

 Schedule of summary of impaired loans

(Dollars in thousands)		Unpaid Principal Balance		Related Allowance
Real estate secured:
Commercial	$	812	$	64
Construction and land development		-		-
Residential 1-4 family		312		-
Multifamily		-		-
Farmland		-		-
Total real estate secured		1,124		64
Commercial		-		-
Agriculture		-		-
Consumer installment loans		-		-
Total	$	1,124	$	64

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2022:

As of December 31, 2022 (Dollars are in thousands)		Average Recorded Investment		Interest Income Recognized		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Real estate secured:
Commercial	$	124	$	6	$	90	$	131	$	-
Construction and land development		114		17		471		491		-
Residential 1-4 family		1,585		48		1,617		1,972		-
Multifamily		-		-		-		-		-
Farmland		307		24		248		417		-
Commercial		14		1		23		31		-
Agriculture		-		-		-		-		-
Consumer installment loans		1				-		-		-
All other loans		-		-		-		-		-
With an allowance recorded:
Real estate secured:
Commercial		407		2		268		338		63
Construction and land development		291		-		-		-		-
Residential 1-4 family		201		6		32		48		23
Multifamily		20		-		-		-		-
Farmland		63		-		-		-		-
Commercial		27		1		-		-		-
Agriculture		-		-		-		-		-
Consumer installment loans		-		-		-		-		-
All other loans		-		-		-		-		-
Total	$	3,154	$	105	$	2,749	$	3,428	$	86

The following tables show an age analysis of past due loans receivable as of December 31, 2023 and 2022, segregated by class:

 Summary age analysis of past due loans receivable

As of December 31, 2023 (Dollars are in thousands)		Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total Loans
Real estate secured:
Commercial	$	878	$	-	$	268	$	1,146	$	239,041	$	240,187
Construction and land development		85		4		-		89		28,741		28,830
Residential 1-4 family		2,628		1,119		886		4,633		233,600		238,233
Multifamily		-		-		199		199		34,372		34,571
Farmland		-		-		-		-		16,401		16,401
Total real estate loans		3,591		1,123		1,353		6,067		552,155		558,222
Commercial		-		20		-		20		53,210		53,230
Agriculture		8		-		-		8		3,500		3,508
Consumer installment loans		140		11		1		152		22,487		22,639
All other loans		-		-		-		-		512		512
Total loans	$	3,739	$	1,154	$	1,354	$	6,247	$	631,864	$	638,111

As of December 31, 2022 (Dollars are in thousands)		Loans 30-59 Days Past Due		Loans 60-89 Days Past Due		Loans 90 or More Days Past Due		Total Past Due Loans		Current Loans		Total Loans
Real estate secured:
Commercial	$	268	$	-	$	-	$	268	$	196,801	$	197,069
Construction and land development		89		-		-		89		42,381		42,470
Residential 1-4 family		3,521		543		341		4,405		222,827		227,232
Multifamily		229		-		-		229		29,481		29,710
Farmland		285		-		-		285		17,459		17,744
Total real estate loans		4,392		543		341		5,276		508,949		514,225
Commercial		56		-		-		56		46,641		46,697
Agriculture		-		-		-		-		3,756		3,756
Consumer installment loans		73		17		17		107		19,202		19,309
All other loans		59		-		-		59		567		626
Total loans	$	4,580	$	560	$	358	$	5,498	$	579,115	$	584,613

As of December 31, 2023 and 2022, there were no loans over 90 days past due that were accruing.

The Company categorizes loans receivable into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans and leases individually by classifying the loans receivable as to credit risk. The Company uses the following definitions for risk ratings:

Pass - Loans in this category are considered to have a low likelihood of loss based on analysis of relevant information about the ability of the borrowers to service their debt and other factors.

Special Mention - Loans in this category are currently protected but are potentially weak, including adverse trends in borrower’s operations, credit quality or financial strength. Those loans constitute an undue and unwarranted credit risk but not to the point of justifying a substandard classification. The credit risk may be relatively minor yet constitute an unwarranted risk in light of the circumstances.  Special mention loans have potential weaknesses which may, if not checked or corrected, weaken the loan or inadequately protect the Company’s credit position at some future date.

Substandard - A substandard loan is inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans classified as substandard must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt; they are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified Doubtful have all the weaknesses inherent in loans classified Substandard, plus the added characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions, and values highly questionable and improbable. There were no loans classified as doubtful at either December 31, 2023 or 2022.

The following table presents the credit risk grade of loans by origination year as of December 31, 2023:

Summary of risk category of loans receivable

As of December 31, 2023
(Dollars are in thousands)		2023		2022		2021		2020		2019		Prior		Revolving		Total
Commercial real estate
Pass	$	46,616	$	49,061	$	48,943	$	28,651	$	20,004	$	43,524	$	997	$	237,796
Special mention		-		-		1,171		314		-		92		-		1,577
Substandard		-		-		-		-		429		385		-		814
Total commercial real estate	$	46,616	$	49,061	$	50,114	$	28,965	$	20,433	$	44,001	$	997	$	240,187
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Construction and Land Development
Pass	$	12,043	$	5,990	$	4,738	$	2,521	$	1,799	$	1,637	$	-	$	28,728
Special mention		-		-		-		-		-		102		-		102
Substandard		-		-		-		-		-		-		-		-
Total construction and land development	$	12,043	$	5,990	$	4,738	$	2,521	$	1,799	$	1,739	$	-	$	28,830
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Residential 1-4 family
Pass	$	29,006	$	33,986	$	41,214	$	13,566	$	13,662	$	80,087	$	23,553	$	235,074
Special mention		-		-		-		-		-		259		-		259
Substandard		87		-		49		-		38		2,662		64		2,900
Total residential 1-4 family	$	29,093	$	33,986	$	41,263	$	13,566	$	13,700	$	83,008	$	23,617	$	238,233
Current period gross charge-offs	$	-	$	-	$	(30)	$	-	$	-	$	(21)	$	-	$	(51)
Multifamily
Pass	$	5,779	$	11,483	$	7,965	$	2,626	$	1,081	$	5,438	$	-	$	34,372
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		199		-		199
Total multifamily	$	5,779	$	11,483	$	7,965	$	2,626	$	1,081	$	5,637	$	-	$	34,571
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Farmland
Pass	$	1,807	$	2,222	$	3,414	$	776	$	1,205	$	6,793	$	-	$	16,217
Special mention		-		-		-		-		-		184		-		184
Substandard		-		-		-		-		-		-		-		-
Total farmland	$	1,807	$	2,222	$	3,414	$	776	$	1,205	$	6,977	$	-	$	16,401
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Commercial
Pass	$	19,306	$	10,228	$	5,638	$	1,591	$	2,167	$	1,342	$	12,777	$	53,049
Special mention		78		100		-		-		-		3		-		181
Substandard		-		-		-		-		-		-		-		-
Total commercial	$	19,384	$	10,328	$	5,638	$	1,591	$	2,167	$	1,345	$	12,777	$	53,230
Current period gross charge-offs	$	-	$	(5)	$	(14)	$	-	$	(26)	$	-	$	-	$	(45)
Agriculture
Pass	$	565	$	518	$	347	$	127	$	67	$	649	$	1,217	$	3,490
Special mention		-		-		-		-		-		-		-		-
Substandard		-		-		-		-		-		18		-		18
Total agriculture	$	565	$	518	$	347	$	127	$	67	$	667	$	1,217	$	3,508
Current period gross charge-offs	$	-	$	-	$	-	$	-	$	-	$	(59)	$	-	$	(59)
Consumer and All Other
Pass	$	12,352	$	4,822	$	2,408	$	864	$	594	$	761	$	1,339	$	23,140
Special mention		-		1		-		-		-		-		-		1
Substandard		4		-		1		3		1		1		-		10
Total consumer and all other	$	12,356	$	4,823	$	2,409	$	867	$	595	$	762	$	1,339	$	23,151
Current period gross charge-offs	$	(198)	$	(49)	$	(13)	$	-	$	-	$	(2)	$	(59)	$	(321)
Total	$	127,643	$	118,411	$	115,888	$	51,039	$	41,047	$	144,136	$	39,947	$	638,111
Total current period gross charge-offs	$	(198)	$	(54)	$	(57)	$	-	$	(26)	$	(82)	$	(59)	$	(476)

The following table presents the credit risk grade of loans as of December 31, 2022, prior to the adoption of ASU 2016-13, under the incurred loss model:

As of December 31, 2022 (Dollars are in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Real estate secured:
Commercial	$	195,376	$	1,425	$	268	$	—	$	197,069
Construction and land development		41,882		117		471		—		42,470
Residential 1-4 family		224,228		406		2,598		—		227,232
Multifamily		29,503		207		—		—		29,710
Farmland		16,848		855		41		—		17,744
Total real estate loans		507,837		3,010		3,378		—		514,225
Commercial		46,471		226		—		—		46,697
Agriculture		3,756		—		—		—		3,756
Consumer installment loans		19,272		2		35		—		19,309
All other loans		626		—		—		—		626
Total	$	577,962	$	3,238	$	3,413	$	—	$	584,613